Europe Flash Composite PMI Data For March Show Services And Manufacturing Sectors In France Expand While Contracting In Germany; Euro Zone Expands For Ninth Straight Month

The euro sculpture is partially reflected in a puddle on a cobblestone pavement in front of the headquarters of the European Central Bank in Frankfurt, Jan. 21, 2012.
Reuters/Kai Pfaffenbach

The flash composite purchasing managers’ index, or PMI, data for March showed that France surprised on the upside eveb as growth in Germany’s private sector slowed down a bit, helping the overall euro zone log its ninth straight month of growth, data from Markit Economics showed Monday.

In France, the flash Composite Output Index rose to 51.6, up from 47.9 in February, to a 31-month high, helped by growth across manufacturing industries even as the country’s services sector expanded for the first time in five months. The Services Activity Index climbed to 51.4, down from 47.2 in February, to a 26-month high, data showed, while manufacturing PMI climbed to 51.9 in March from 49.7 in February to a 33-month high.

“Much-improved PMI data in March indicate that the private sector is moving in the right direction, with activity, new business and backlogs all returning to growth,” said Jack Kennedy, a senior economist at Markit, in a statement, adding: "If activity growth can gain some traction in the coming months then we could also see some improvement on the employment front, which would deliver a timely boost to confidence.”

Meanwhile, in Germany, the Composite Output Index fell to a three-month low of 55.0, down from 56.4 in February, as growth weakened in both the manufacturing and services sectors, according to Markit. However, though growth dipped in March -- below February’s 33-month-high reading -- the rate of growth remained about the long-term average, a Markit statement noted. The Services Activity Index slowed to 54.0, down from 55.9 in February, to a two-month low while manufacturing PMI fell to a four-month-low of 53.8, down from 54.8 in February.

“Although the rate of expansion in activity eased to a three-month low, growth in the three months to March was the joint-strongest since mid-2011,” said Oliver Kolodseike, an economist at Markit, in a statement, adding: “The survey suggests we should expect another quarter of economic growth in Germany, with recent data pointing to GDP growth of up to 0.7% in the first quarter.”

In the euro zone, the Composite Output Index in March stood at a two-month low of 53.2, down from 53.3 in February, yet marking an expansion for the ninth consecutive month, according to Markit. The Services PMI Activity Index was also at a two-month low of 52.4, down from 52.6 in February, while Manufacturing PMI stood at a three-month low of 53.0, down from 53.2 in February.

“The ongoing upturn in business activity in March rounds of the eurozone‟s best quarter since the second quarter of 2011. The survey is signalling a 0.5% increase in GDP in the first quarter, building on the 0.3% increase seen in the final quarter of last year," Chris Williamson, Markit's chief economist, said in a statement, adding: “The rest of the region also enjoyed its best quarter for three years, providing further evidence that the 'periphery' is staging a robust-looking recovery.

"However, concerns will persist regarding the deflationary forces, especially in the periphery. With prices charged by manufacturers and service providers both falling again in March, there remains an argument for further stimulus, especially if the rate of growth of activity cools again in April,” he said.